We’re not perfect but when purchasing a real estate investment, we can’t make do with slack but instead strive for near perfection. After all, mistakes in this field can be pretty nasty and not to mention deadly for one’s bank account. That said, we’ve asked a real estate agency in London to enlighten us and tell us about the crimes we’re likely to make or are already committing.
Your Mistake: Lack or Absence of Research
Different properties are priced variedly due to a combination of several factors like the current state of economy, market supply and demand, location, depreciation, asset condition and useful life to name a few. This requires one to make thorough and adequate research to better compare one asset from another and to determine which best suits one’s needs and preferences.
Your Mistake: Failure to Authenticate
Before buying and paying for any investment, you must first check the authenticity of the property’s ownership aka its title. Make sure that the person selling it has the right to do so or has been granted to act as a representative by someone who does. Check if there are any liens or encumbrances on it too. Failure to do so can tantamount to a massive headache and may end in an ugly legal battle.
Your Mistake: Ongoing Cost Oversight
There are some things that sellers don’t blatantly make known in a listing or advertisement. Such is the case for repairs and maintenance expenses otherwise known as ongoing costs. This is why having the property pre-surveyed before closing in is essential.
Your Mistake: Financial Unpreparedness
A detailed funding plan or budget has to be set up. These are big acquisitions and will require a huge amount of resources. This necessitates financial preparedness and one has to do this way before the actual purchase because money as we all know does not come easy. Plus, credit like loans and mortgages will take time to arrange. Do this too late and you’re likely to miss out on an opportunity.
Your Mistake: Zero Surveys
As mentioned earlier, you need to hire a chartered property surveyor to inspect and assess the property says a real estate agency from London. This is to ensure that the asset is in good condition as expressed by its sellers. Furthermore, it shall bring to light other important details and to likewise validate facts like current market value and remaining useful life.
Defined as an intense real estate public sale and open cry competitive bidding, property auctions gather investors from all across the pond to vie for the best assets in the hopes of snagging them at a fraction of the cost.
It’s of no secret that despite the bidding process, it’s possible to end up buying a property for less than the price had it been sold in the market the traditional way. This may not always be the case especially when an inexperienced bidder gets overwhelmed and pays for more than what an asset’s worth. Lack of skill and know-how can be fatal in these circumstances but that’s a story for another day.
Today, we’ll talk about the various kinds of property auctions. Yes, there’s more than one. Let’s get to know them one by one.
Open Cry Property Auction – Also known as “absolute bidding”, this is perhaps the most familiar type in this list. Simply put, the property is awarded to the highest bidder. That is regardless of whether or not such amount is acceptable or favorable to the seller. Here, price is the only consideration making it a very exciting method for sellers and bidders alike.
Minimum Bid Property Auction – In this arrangement, the auctioneer only accepts bids at or above minimum price. This price is published and acknowledged through the various auction brochures, newsletters, ads and at the event proper. This type is favorable to sellers because they are guaranteed with an acceptable amount or even higher while buyers get a starting point by which they can align their expectations and prepare necessary funding.
Reserve Property Auction – Here, a published price is not applicable. Moreover, sellers or owners of the assets have the right to either accept or reject a bid at the onset or at a later date despite it being the highest offer and/or at a favorable price.
Online Property Auction – As its name suggests, this type occurs within the realms of cyberspace. It can either be an open cry, minimum or reserve auction. Despite being processed and occurring in the World Wide Web under a legal and certified website, the transactions are still deemed binding on all parties. The only difference is that, it involves computers and the internet.
Simulcast Property Auction – This last type is where the bidding process occurs simultaneously in different locations and platforms. For instance, one may be held in London and the other in Paris all while an online portal is also running.
Many investors choose to rent out their property investment in a bid to gain returns. It is a very lucrative endeavour but of course only if all the right factors are put together. This applies to all types of properties namely retail, commercial and industrial.
In such cases, one of the most powerful tools that any landlord or owner can have would be a rent review. But what is it?
Rent reviews in its simplest sense pertain to the act of raising or increasing the lease rate. It is a provision in the lease of a particular property whereby the amount to be paid is reconsidered at stated intervals, often every 3 or 5 years but not exclusively. It is crucial because landlords cannot simply raise the bar higher without valid and justifiable reasons. They have to prove that the asset grew in value. So how do we ace one? Here are some guidelines.
Understand property valuations. – Because a huge chunk of the process depends on the asset’s supposed bigger market value, it is important to understand how these things work and the various factors that could lead to it. After all, knowledge is power.
Time to bring out those papers. – There’s a reason why you’re supposed to maintain and organize all your files and documents. And no this is beyond accounting and tax purposes. Things such as a copy of the completed lease contract, memoranda, deeds, licenses and receipts or invoices of ongoing costs will prove useful for this reason.
Hire the right professionals. – You can’t run a valuation on your own. You need experts to do that. For instance there’s a chartered property surveyor. Not only will they examine the asset and prove its worth but they too can act as a negotiator or official representative. Like they say, if you can’t do it then hire someone who can. It saves everybody all the trouble.
Document everything. – Once accomplished, make sure to continuously keep a tab on all of these documents because they will formalize the review. Make it legally binding by ensuring that all the parties sign the memorandum that contains the agreed lease and attach such to your copy of the lease. You should know by now that a property investment rent review uses a lot of these official papers and documentary evidence. Should you find it necessary to do another one in a few year’s time, this will come in handy.